The government wants to tax winnings of more than €100 from lottery and pools, since a 2012 law has so far netted only one tenth of what was expected.
Under Cyprus' bailout agreement, the government and the Troika were projecting revenue of €20 million in 2013 from a tax on winnings of more than €5,000. Instead, only €2m has made its way into the government coffers.
The Finance Ministry bill discussed by the House Finance Committee on Monday would introduce a 15% tax on winnings between €100-€500 and 20% for winnings of €500 and above.
Diko MP Angelos Votsis, who is the deputy chairman of the committee, said authorities had made their projections based on winnings of €115m a year from Greek pools and lottery operator OPAP.
But they had failed to take into consideration that most of the winnings distributed were for sums below €5000.
But he said that the specific proposal before the committee does not resolve the problem, which is why the Finance Ministry has been asked to come up with a more comprehensive plan.
The new tax rates are expected to raise €8m from OPAP and €2m from the state lottery - only half the €20m sought. Moreover, the law is seen as creating unfair competition as regards other betting companies.
Disy MP Prodromos Prodromou said there had been an error in the calculation because of lack of knowledge as to how OPAP distributed the winnings, which in their majority was in small sums.
A new effort will be made so as to collect the €20m that was projected. He said the government should take into consideration that other types of lottery games were not taxed, but also that OPAP enjoys preferential treatment since it has a monopoly on some of the games.